Half of Legacy Services Scheduled for Replacement

Legacy services (frame relay, leased line, and ATM) still are in use in over half of the U.S. organizations within four vertical segments (professional services, finance, insurance, healthcare, and government) surveyed recently by In-Stat researchers.

Over 50 percent of these current legacy services users are migrating, or plan to migrate, some or all of these services to other services, such as IP/MPLS and Ethernet, In-Stat says.

That's what one calls being "past the tipping point." Ethernet and IP are not the "protocols of tomorrow." Very soon, they will be the "legacy" or "mainstream" protocols.

Euro Telcos: Managed LAN Contracts Up

Looking at 177 major enterprise deals signed by European telcos in the second half of 2007, Forrester Research analyst Phil Sayer finds a dramatic increase was in managed local area network services, from seven percent in the first half of the year up to to 13 percent in the second half.

That doesn't necessarily mean desktops. There was a big drop in the number of deals including desktop services.

The the most unexpected trend, Sayer says, was the reduction in the number of deals including managed audio and video conferencing.

Managed audio and video services were present in only one percent of deals, compared with four percent in the first half of the year.

The percentage of converged deals, those with both telecom and an IT services component, was up from 22 percent to 27 percent.

The number of deals was up significantly from the 120 signed in the first half of the year.

The total contract value fell to €2.1 billion, down from €2.6 billion in the previous half-year, because the average deal size shrank, the number of small contracts increased, and there was a big drop in the number of "megadeals".

Large telcos have more than dabbled in the managed IT services arena for some years, with mixed success. Going forward, though, there is little doubt that they will have to do better in that regard. Volume-wise, more business in the consumer segment is going to be taken by cable companies and other mass market specialists.

In the SME space, small specialist firms will continue to compete effectively based on "local touch" and "local presence." But large tier one providers will continue to have the best position in global deals needed by large trans-national businesses.

As all communications and computing-based applications reach further towards the actual end user devices, more control and management is needed. So tier one providers have no choice but to reach past the traditional points of demarcation and support applications and software running on all sorts of end user devices.

Why Do You Need Linear TV?

"I think the Netflix Player proves all the essential concepts," says New York Times technology writer Saul Hansell. "If a TV, with a handful of extra chips, can provide an experience as satisfying as the Netflix Player can, why do we need any other form of video distribution?"

That indeed is an important question which ultimately will be decided by content owners and users, not distributors, with all due respect. If users decide they want to watch streaming media delivered over broadband and sent to the TV, and if a suitable revenue model can be devised, content providers are going to support the business model.

But don't discount traditional packaging partners. Program networks (packagers) historically have been effective at creating "appointment" TV or "big event" hype to drive audiences to content as a shared experience. They've proven effective brand creators as well.

It remains to be seen if they will continue to be as effective in a world when the while idea of "scheduled" viewing is in greater disfavor. But don't discount their ability to master whatever techniques are required to sustain linear viewing models.

There is a difference between turning on a television or other display to watch a specific piece of content, and turning on a TV just to "watch TV." Linear television isn't so helpful in the former case, but works pretty well in the latter case.

In the latter case, a packaged "channel" offers a fairly clear guide to what sort of content might be on at any given moment. For somebody who is not actively looking for a specfic program, but simply "something to watch," linear video and "brands" are fairly effective shortcuts.

Still, the Netflix Player seems to be simple enough to use, and reasonably enough priced, to get traction at this point in time. The Player is no immediate threat to traditional cable operators, satellite distributors, networks or telco video providers. Changes of this sort always take a while to get going.

So far, though, the simplicity, low cost, ease of porting to a TV display and access to free content arguably are better than any earlier approaches.

Nortel Adds Web 2.0 Software

Nortel's new Adaptive Application Engine software, built around Session Initiation Protocol, allows Nortel customers to create Web 2.0 applications like social networking, blogs, and wikis with IP voice and multimedia.

Operators can choose to run the software on hundreds of Red Hat Enterprise Linux compliant servers.

The Adaptive Application Engine software provides an open programmability environment and web service Application Program Interfaces which allow third-party software developers to easily develop new applications which use call routing, presence and federated IM.

The software is designed to support both smaller service providers as well as tier one providers as well.

The Adaptive Application Engine software can be deployed as a SIP Application Server, as an IMS application server or as advanced capabilities on the Communication Server 2000.

Nortel says the new software will allow service providers to create unified communications services, federated instant messaging and IP communications integrated with Web applications.

The software also supports features such as using TVs to control calls or send instant messages.

The software also will allow service providers to create fixed mobile convergence services such as making mobile phones into office extensions and allowing calls to be moved back and forth across tethered and mobile devices.

Nortel is first among the large traditional switch vendors to make such tools available as a "bolt on" to its existing architecture. Depending on how the software is received, it could be an important step for service providers on the Nortel platform.

Up to this point there has been some skepticism that smaller service providers, in particular, would be able to create these sorts of applications on their own. The software is half the solution. Now Nortel has to pull together a developer community and make those apps available to its customers.

Digital to Analog Conversion: Why Cable Does It

Since most of the world's electronic entertainment and communication is moving from analog to digital, you might wonder why anybody would want to go the other way: take digital content and change it back to analog.

Well, as typically is the case in the networks business, there is a simple business reason for wanting to undertake an operation that might not make so much immediate sense.

Cable executives can save some money on digital converter boxes if they can supply simple tiers of popular programming to analog TVs without the need for a box. That might apply to second and other sets, for example, or to some customers who want basic services.

The other angle is that some percentage of the customer base might prefer simple analog-only service. And if all the other providers require digital decoders, cable might have an advantage.

Thomson has introduced a simple box the company said will cost less than $40 and allow delivery of 20 to perhaps 40 channels of analog service.

At the same time, such decoders will allow cable operators to migrate their networks to all-digital operation, allowing analog tiers to be offered to customers who want them.

Comcast has announced that it will rely on such converters to convert 20 percent of its systems to all-digital operation in the fourth quarter.

Cisco Systems, Motorola and Pace Micro Technology also have versions of the decoder.

It's a good thing to let the business case drive the technology. And this is an example of that.

VoIP License Shipments Dip in First Quarter

In the first quarter 2008, vendors shipped a total of about 7.9 million VoIP subscriber feature server licenses for deployment in service provider networks, say analysts at iLocus.

The number of lines is down by 19 percent quarter over quarter, though the analysts note that the third and fourth quarters of 2007 were marked by unusually high growth, so the sequential comparisons would be more difficult than is typical.

In the first quarter, Nokia Siemens Networks led the VoIP subscriber lines equipment market on a worldwide basis with a market share of 19.8 percent. That lead is followed by Italtel at number two and Cisco at number three worldwide.

Business Centrex lines account for over 1.03 million of the licenses. The remaining 6.87 million were mainly deployed for residential voice over broadband apps or switch replacement.

Analysts at iLocus caution that they do not track IP upgrades to TDM ports. They do track VoIP hosted telephony implementations (such as hosted PBX and VoBB), new greenfield VoIP deployments, complete replacement of legacy switches with VoIP, and extension of existing legacy networks with VoIP equipment in new geographies.

Netflix Enters Streaming Business

Netflix now is in the streaming business. A new "content to the TV" box made by Roku will allow subscribers to stream an unlimited number of movies and television shows directly to televisions.

The device costs $99. The video content is free to anyone with a Netflix subscription of $8.99 a month or more. Most of the video content will consist of older material, rather than new releases, though.

Carrier Ethernet Scorecard

More than 80 service providers are delivering retail carrier Ethernet services to business customers in the United States, say analysts at Vertical Systems Group.

Services range from Dedicated Internet Access (DIA) to Ethernet Private Lines to VPLS (Virtual Private LAN Service).   

Incumbents, including market leaders AT&T and Verizon, deliver nearly half (46%) of all business customer Ethernet ports installed in the U.S. 

Another one third of the total (34%) is supplied by competitive providers, with Time Warner Telecom and Cogent topping this segment.

Cable MSOs have the smallest base overall (20%), however this is the fastest growing segment of the U.S. Business Ethernet services market based on ports.

Cox and Time Warner Cable currently lead in the Cable MSO segment.

Femtocells, Wi-Fi, or All of the Above?

Though Wi-Fi remains the clear home-based wireless networking technology, mobile providers also are experimenting with UMA and femtocell techniques. But Aruba Networks suggests the ultimate solution might bit of "all of the above," as often happens in the communications business.

Those discussions, likely to become more pronounced as service providers grapple with their fixed-mobile convergence strategies, will require some choices.

Wi-Fi has high production volumes, low prices and good consumer acceptance. Femtocell technologies currently must climb an experience curve to provide reasonable consumer device prices, and sort through some business model issues, Aruba argues.

Wi-Fi already has a significant network effect, so mobile operators must choose whether to leverage Wi-Fi or use femtocells.

Mobile operators have the advantages of macro-cell coverage and phone numbers, so Aruba suggests a hybrid approach using both Wi-Fi and femtocell technologies.

A simple device might combine a Wi-Fi access point and femtocell, or possibly a digital subscriber line connection as well.

Microsoft Sees Big Future for Hosted Enterprise Email

Microsoft Corp. sees tens of millions of corporate e-mail accounts moving to its data centers over the next five years, Reuters news service reports. Consider that a vote in favor of "cloud computing" and hosted services.

Chris Capossela, Microsoft SVP, says he expects Microsoft to allow enterprises to choose between the more-traditional licensing model and a subscription-based service.

Exchange Online, the service offering for its Exchange mail and messaging server software, will be the primary application adopted by corporate customers, Capossela believes.

"In five years, 50 percent of our Exchange mailboxes will be Exchange Online," he predicts. Small-business specialist Cbeyond probably would agree. In its Atlanta market, its oldest market, Cbeyond is seeing 40 percent penetration of the hosted Exchange service it offers to small business customers.

According to research firm Radicati, Exchange will run about 210 million corporate e-mail accounts in 2008, growing to 319 million mailboxes in 2012.

16.3 Million Consumer VoIP Lines in Service

By the first quarter of 2008, 16.3 million consumer VoIP lines were in service, representing 13.8 percent of all U.S. households, and 27 percent of broadband households, say researchers at TeleGeography.

Those customers--80 percent or so--largely but not exclusively have been gained by cable companies, at the expense of the incumbent local telephone companies.

Since the start of 2005, the RBOCs have lost 17.3 million residential telephone lines, while VoIP service providers have gained 14.4 million new customers.

User-Surly Web Sites

Most Web sites are fairly user friendly these days. But every once in a while you encounter a site designed by people who seem to have no idea why people come to a site, and how they use them.

37 Signals notes a site where six different kinds of shoes were found in a “performance” category. When 40 uninvolved people were asked what “performance” meant to them, only 10 had even a vague idea.

Use "paths" when designing, 37 Signals says. "A path is a line that goes from a starting point A to an accomplishment B." That's what users want. That’s a path. "Where are your golf shoes?" is a path.

"Does my cell phone support international calling?" That’s a path as well.

"Collect all the paths you can think of in a pile, pull out the 8 paths that 80 percent of your visitors come looking for, and that’s your home page.

Blog Readership 67% of Internet Users by 2012

Blogs are a new form of media, but they are "media." The number of people creating blogs in the United States will reach over 35 million by 2012, roughly 16 percent of the Internet population, according to eMarketer. But as is the case for most forms of user-generated content, most people are content to watch, listen or read, rather than creating content themselves.

By 2012, more than 145 million people, 67 percent of the U.S. Internet population, will be reading blogs at least once a month. That is up from a readership of 94 million in 2007, or 50 percent of Internet users.

Paul Verna, eMarketer senior analyst, says "U.S. blog advertising will reach $746 million in 2012, up from $283 million in 2007."

Like podcasts, blogs tend to appeal to specific audiences. Accordingly, much of the demographic targeting that marketers work so hard to achieve in the mainstream media is already done for them.

U.S. Wireless Data $24.5 Billion in 2007

U.S. wireless customers spent $24.5 billion on data services in 2007, with usage growing 55 percent, says consultant Chetan Sharma.

Growth increased steadily through the year, with fourth-quarter 2007 data services revenues hitting $6.9B. At current rates, the only question is how much above $28 billion will be spent in 2008.

Fourth quarter data revenue was up 7.8 percent sequentially. Average revenue per user .declined by $0.81 and reversed the trend of overall ARPU uptick of the last two quarters, though.

Average voice ARPU declined by almost $1.50 while average data ARPU inched up by $0.68, Sharma says.

Verizon and AT&T grew annual data revenue 64 percent. Overall, the top carriers earn about 19.34 percent of total revenue.

Non-messaging data revenues continue to be in the 50 to 60 percent range of toal data revenues.

MID Movement Good for 4G

Asustek Computer will launch its Atom-based 8.9-inch Eee PC 901 in June 2008. Hewlett-Packard recently launched a Windows XP version of its Mini-Note 2133. Dell is said to be readying its own version of a mini-notebook. Given the popularity of Linux-based Eee devices, and the addition of XP-powered machines, a class of devices--"mobile Internet devices"--is being seeded into the market that are precisely the sort of new mobile-centric machines fourth-generation networks are poised to serve.